Departure of Lands' End CEO Underscores Company's Ongoing Difficulties - TheStreet

Shares of already-beleaguered clothing brand Lands' End (LE) - Get Report  fell nearly 15% in Monday trading after the company and its unlikely CEO Federica Marchionni parted ways.

Marchioni's hiring was part of the company's effort to use a style of marketing that has helped a number of luxury brands succeed during retail's past few difficulty years and to reinvent itself as more hip and sophisticated. But Marchionni didn't gain much traction and was hurt by the problems of Lands' End's parent company Sears Holding, not to mention a shaky, evolving retail landscape.

Joseph Boitano and James Gooch will serve as co-interim CEOs.

Lands' End is an unattractive investment. Investors should stay away, even at the recent discount. 

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On Monday morning, Lands' End announced the resignation of Marchionni, who became CEO early in 2015. Prior to that, she had served as the U.S. head of upscale fashion firm Dolce & Gabbana, and before that, was an executive at Ferrari.

The match of Marchionni who worked for luxury brands and budget conscious Lands' End seemed odd from the beginning. 

The company, which was spun off by struggling Sears Holding in 2014, is known mainly for kids' school uniforms and backpacks and sensible clothing, which it sells at Sears and Kmart stores and through catalogs.

But Marchionni attempted and failed to revamp the company.

During her tenure, Lands' End staged high-fashion-style photo shoots and hosted popup stores in the trendiest districts of New York City. It also debuted items such as stiletto heels and clothing cut more provocatively.

However, Lands' End is firmly a conservative, Middle American brand, and the new fashion-forward changes failed to bring in new customers or generate enough business from longer standing ones. Marchionni faced a historically difficult, complex retail world that is shifting increasingly online. For all six quarters that she served as CEO, the company recorded negative same-store sales. The stock has also sunk by more than 33% in the last year.

Marchionni's ouster seemed inevitable with each recent, passing week. "The board of directors and I have agreed it is time for others to bring Lands' End into the future," she said in a statement today.

There could be some positives in Lands' End's future. One of Marchionni's more controversial and potentially successful decisions was selling via Amazon.  Lands' End joined other popular brands, including Nike and Hanesbrands. Although selling in Amazon's e-commerce marketplace can be expensive for major brands, this will be a big part of the future for them.

Today's price plummet does not make this a good time to get in on Lands' End. In its short life since leaving Sears, this clothing company has already experienced its fair share of upheaval. (Marchionne was the second CEO in two years.) In addition, Sears stores have been phasing out their in-store Lands' End kiosks (as well as shuttering themselves), so there is even less opportunity for the company to sell its products.

Unless you really like risk, stay away from this stock. With a clear lack of direction and leadership, the company could even fail.


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The author is an independent contributor who at the time of publication held none of the stocks mentioned.